|

New Zealand Dollar holds losses to near 0.5650 following China PMI data

  • NZD/USD softens to around 0.5665 in Wednesday’s Asian session.
  • China’s RatingDog Manufacturing PMI matched expectations in June.
  • The US Nonfarm Payrolls are expected to show 110,000 job additions in June.

The NZD/USD pair holds negative ground near 0.5665 during the Asian trading hours on Wednesday. The New Zealand Dollar (NZD) remains weak against the US Dollar (USD) following the Chinese economic data. The US ISM Manufacturing Purchasing Managers Index (PMI) report will be released later on Wednesday. On Thursday, the attention will shift to the US jobs data for June.

Data released by RatingDog on Wednesday showed that China’s Manufacturing PMI declined to 51.7 in June, compared to 51.8 in the previous reading. This figure came in line with the market consensus. However, this report fails to boost the China-proxy Kiwi as traders scaled back expectations for aggressive Reserve Bank of New Zealand (RBNZ) rate hikes.

ASB Bank dropped its call for a July hike and now expects the RBNZ to keep the OCR on hold at the upcoming July meeting, followed by steady 25-basis-point increases starting in September, with the OCR peaking at 3.25% by early 2027.

The key US jobs data for June will take center stage later on Thursday. This report could give traders a greater sense of how accurately markets are pricing the chances of Fed rate hikes this year. Markets expect a rise of 110,000 jobs in June, while the Unemployment Rate is projected to hold steady at 4.3% during the same period.

New Zealand Dollar FAQs

The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.

The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.

Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.

The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.

Author

Lallalit Srijandorn

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

More from Lallalit Srijandorn
Share:

Editor's Picks

GBP/USD weakens below 1.3250 on UK political risks, BoE repricing

The GBP/USD pair trades in negative territory around 1.3245 during the early Asian trading hours on Wednesday. Traders await the UK political developments, focusing on potential leadership by Andy Burnham and adherence to existing fiscal rules. Bank of England Governor Andrew Bailey is set to speak later in the day. On Thursday, all eyes will be on the US jobs data for June.

EUR/USD declines to near 1.1400 as softer German inflation undercuts ECB hike bets

The EUR/USD pair loses momentum to near 1.1410 during the early Asian trading hours on Wednesday, pressured by receding bets for aggressive tightening by the European Central Bank (ECB). Traders will take more cues from the preliminary reading of the Harmonized Index of Consumer Prices from the Eurozone and US Manufacturing Purchasing Managers Index report, which are due later in the day.

Gold's path of least resistance remains to downside ahead of Warsh

Gold comes under renewed selling pressure early Wednesday and gives up $4,000 yet again. The US Dollar stands tall on surging USD/JPY, Mideast woes and hawkish Fed bets. Gold remains poised to crack November 2025 lows near $3,930 amid bearish technicals.

Bitcoin drops near $58K as ETF outflows surge, downside risks persist

Bitcoin could see a short-term relief from heavy selling pressure as quarter-end portfolio rebalancing could potentially revive spot BTC exchange-traded funds inflows, according to a K33 report on Tuesday.

Why a hawkish Bank of Japan could trigger the next Bitcoin sell-off

The Japanese Yen hits a 40-year low of 162.00 against the US Dollar, raising concerns about intervention or additional rate hikes by the Bank of Japan. BoJ may sell US Treasuries to buy back Yen, potentially pushing US bond yields higher and making Bitcoin less attractive to investors.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.